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The Redwood City, California-based firm said this week that it will be cutting the expense ratio on its new mutual fund offering in half, to 0.25 percent from 0.50 percent. When the product was announced in February, a number of customers took to social media to voice questions and concerns about the offering.

“One of the things that caught us by surprise,” Chief Executive Officer Andy Rachleff said in an interview, “was that we thought continuing our policy of always delivering existing services at better prices than available would be compelling, but clients compared the fee to other exchange traded funds instead of other risk parity strategies.”

Wealthfront and other robo-advisers have made a name for themselves by offering financial tools and services at much lower fees than previously available by using technology and passive investing through ETFs and index funds. When Wealthfront’s product was introduced, the fee of 0.50 percent was much higher than customers were used to seeing, and the firm said that a number of these users reached out to the company to address it. The risk-parity feature was also something users would have to opt out of rather than opt into, and the move would result in higher fees for clients unless they chose to opt out.

Risk parity is a type of asset-allocation strategy that aims to hold an equal amount of risk among investment classes, which react differently to market changes. The trader diversifies -- among, say, fixed income, equities and inflation-risk assets -- based not on price but on volatility or some other measure of risk. The less volatile an asset, the bigger weighting it gets in the portfolio. It was developed in the mid-’90s and used by hedge funds, most popularly associated with Ray Dalio’s Bridgewater Associates.

While Rachleff said he wished his firm would have made the fees this low to begin with, he said Wealthfront had clear communication with customers surrounding the launch.

“In hindsight, we should have delivered it at 0.25 percent to begin with,” he said.

Wealth management startups took off shortly after the 2008 financial crisis, latching onto the rise of passive investing as well as mobile applications and websites that appealed to millennials. The problem for some of the startups in the industry was that many incumbents in asset management, such as Fidelity Investments, Charles Schwab Corp. and even Vanguard Group Inc. quickly launched similar products and used their built-in scale to quickly grow. This has led to a wave of new products and features as each firm tries to compete.

“This is indicative of the point that you can’t sit still and you have to think about what’s next and how you can differentiate yourself,” Devin Ryan, analyst at JMP Securities, said in an interview. “I think there are going to be many more announcements like this,” he added.